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OneSavings Bank grows despite stamp duty rise, shares jump

Mortgage applications from buy-to-let and small business landlords continued to roll in during the first half
August 25, 2016

OneSavings Bank (OSB) has had to contend with the double whammy of the stamp duty hike for buy-to-let landlords and a cut in interest rates so far this year. Chief executive Andy Golding was keen to reassure investors the impact on the challenger bank is limited. Firstly, OneSavings Bank targets professional buy-to-let landlords with multiple properties rather than those with "one bit of chrome and glass somewhere", he says. Higher tax charges are expected to professionalise the market. Secondly, the bank has hedged any of its liabilities that are priced at a fixed rate of interest.

IC TIP: Buy at 271p

Lending to buy-to-let landlords and small- and medium-sized businesses provided the lion's share of loan book growth during the first half. New loans here were up a quarter to £800m, with the loan portfolio ending the period with a net carrying value of £3.5bn. Profits were up nearly two-thirds to £60m.

However, following the sale of its stake in Rochester Financing, the value of the first charge residential loan book declined 9 per cent to £1.3bn. The second-charge book was fairly flat, and the group's run-off personal loan book provided profits of £1.5m (2015:£4.4m)

Analysts at Investec expect net tangible assets per share of 159p at end-December 2016, up from 121p in 2015.

ONESAVINGS BANK (OSB)

ORD PRICE:271pMARKET VALUE:£659m
TOUCH:270-272p12-MONTH HIGH:413pLOW: 173p
DIVIDEND YIELD:3.5%PE RATIO:5
NET ASSET VALUE: 155pLEVERAGE:16.9

Half-year to 30 JunTotal operating income (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201576.24715.02.0
201696.510030.22.9
% change+27+113+101+45

Ex-div: 13 Oct

Payment: 4 Nov